Land and Houses Bank's lending profile

Since its upgrade from a retail to a commercial bank in 2011, LH Bank has attempted to rebalance its credit portfolio away from retail loans, mostly mortgages, towards corporate loans.

As of the end of June, corporate loans had increased to 56 per cent from 13 per cent, while retail loans had shrunk from 56 per cent to 25 per cent.

By the end of this year, corporate loans will be 60 per cent and retail loans 23 per cent. The rest is SME loans.

President Sasitorn Pongsathorn said yesterday that changing the loan profile has prepared the bank to talk with prospective strategic partners.

Even though the bank wanted to see corporate loans, SME loans and retail loans to be one-third of its portfolio, the economic uncertainty at home in the past few years had not given much support to a small bank like LH Bank in balancing its loan portfolio.

"We should grow in what we can that is safe. Corporate loans are safe for the bank.

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"It also proved that a small bank can see strong growth from high quality loans. Our net profit has continued to grow faster than our peers," she said.

The bank might use pricing to attract corporate customers away from other banks. This will squeeze its net interest margin (NIM), but its NIM stood at 2.4 per cent, which is acceptable to the bank.

In the first half of this year, LH Bank reported net profit growth of 40.5 per cent year on year, the best result in the industry.

This year, LH Bank has started talks with new financial institutions from Europe and Asia, besides the three financial institutions that it has been in discussions with for many years.

The bank wants to reinforce trade finance, which is a weak area, along with digital banking.

The bank, however, has still not reached any conclusion with its suitors because it wants synergy solutions from them in making the bank stronger. In every meeting, the bank challenges those partners to show their strengths to support it.

During the past four years, LH Bank has been approached by many financial institutions and non-financial institutions like Charoen Pokphand Group. However, CP was said to have ended talks with LH Bank.

This year, the bank is still comfortable with its target for loan growth of 15-20 per cent and for net profit growth of 20-25 per cent. The bank plans to maintain its NPL ratio at last year’s 2-per-cent level while boosting its NPL coverage to 95-100 per cent from 86.4 per cent last year.